State Street Corporation (STT) Bundle
A Brief History of State Street Corporation
State Street Corporation, founded in 1792, is one of the oldest financial institutions in the United States. Over the years, it has evolved into a leading provider of financial services to institutional investors. As of 2024, State Street continues to operate as a key player in the global financial market.
Recent Financial Performance
For the third quarter of 2024, State Street reported a net income of $711 million, reflecting a significant increase from $422 million in the previous quarter. The total revenue for the quarter reached $3.36 billion, marking a 15% increase year-over-year. This growth can be attributed to higher net interest income and increased asset servicing fees.
| Financial Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Income (in millions) | $711 | $422 | 68.4% |
| Total Revenue (in millions) | $3,360 | $2,915 | 15.3% |
| Common Stock Dividends Declared (in millions) | $224 | $213 | 5.2% |
| Total Assets (in billions) | $252.8 | $237.6 | 6.4% |
Assets Under Custody and Management
As of September 30, 2024, State Street reported Assets Under Custody/Administration (AUC/A) of $46.76 trillion, a 17% increase from $39.91 trillion in the same period in 2023. The Assets Under Management (AUM) also rose to $4.7 trillion, up 29% from $3.64 trillion a year earlier.
| Assets Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| AUC/A (in trillions) | $46.76 | $39.91 | 17.2% |
| AUM (in trillions) | $4.7 | $3.64 | 29.2% |
Capital Management and Share Buybacks
In the third quarter of 2024, State Street returned a total of $674 million to shareholders through dividends and share repurchases. The company declared a common stock dividend of $0.76 per share, an increase from $0.69 per share in the same period of the previous year. Furthermore, State Street repurchased approximately 5.4 million shares at an average price of $84.00, totaling $450 million.
| Share Repurchase Program | Q3 2024 | Q3 2023 |
|---|---|---|
| Shares Repurchased (in millions) | 5.4 | 0 |
| Average Cost per Share | $84.00 | N/A |
| Total Cost (in millions) | $450 | $0 |
Market Position and Strategic Initiatives
State Street remains a crucial player in the asset management and custody services sector. The company has focused on enhancing its technology and operational efficiency to better serve clients. Notably, it has invested in digital solutions to streamline processes and improve client engagement.
As of September 30, 2024, State Street's Common Equity Tier 1 (CET1) capital ratio stood at 11.6%, reflecting strong capital management practices. The company has set a target range of 10-11% for this ratio, and it continues to maintain a Tier 1 leverage ratio of 5.5%.
| Capital Ratios | Q3 2024 | Target Range |
|---|---|---|
| CET1 Capital Ratio | 11.6% | 10-11% |
| Tier 1 Leverage Ratio | 5.5% | 5.25-5.75% |
A Who Owns State Street Corporation (STT)
Major Shareholders
As of September 30, 2024, State Street Corporation (STT) has a diverse ownership structure comprising institutional investors, mutual funds, and individual shareholders. The following table outlines the major shareholders based on the latest available data:
| Shareholder Type | Shares Owned (millions) | Percentage of Ownership (%) |
|---|---|---|
| BlackRock, Inc. | 55.2 | 8.30 |
| The Vanguard Group, Inc. | 51.1 | 7.60 |
| FMR LLC (Fidelity Investments) | 37.4 | 5.50 |
| State Street Global Advisors | 20.5 | 3.00 |
| Other Institutional Investors | 200.0 | 29.60 |
| Retail Investors | 100.0 | 14.80 |
Institutional Ownership
Institutional ownership remains a significant aspect of State Street's shareholder base. As of the third quarter of 2024, institutional investors collectively held approximately 60% of the total shares outstanding. The following data highlights the largest institutional investors:
| Institution | Shares Owned (millions) | Ownership Percentage (%) |
|---|---|---|
| BlackRock, Inc. | 55.2 | 8.30 |
| The Vanguard Group, Inc. | 51.1 | 7.60 |
| FMR LLC (Fidelity Investments) | 37.4 | 5.50 |
| State Street Global Advisors | 20.5 | 3.00 |
Recent Share Repurchase Activity
In 2024, State Street Corporation announced a new common share repurchase program, authorizing the purchase of up to $5.0 billion of its common stock. The following table summarizes share repurchase activity for the year:
| Period | Shares Repurchased (millions) | Average Cost per Share ($) | Total Repurchased ($ millions) |
|---|---|---|---|
| Q1 2024 | 3.0 | 80.00 | 240 |
| Q2 2024 | 4.0 | 82.50 | 330 |
| Q3 2024 | 5.4 | 84.00 | 450 |
| Total 2024 | 12.4 | 81.45 | 1,020 |
Preferred Stock Ownership
As of September 30, 2024, State Street had several series of preferred stock outstanding. The following table provides details regarding the preferred stock issued:
| Series | Shares Issued (thousands) | Liquidation Preference ($) | Dividend Rate (%) |
|---|---|---|---|
| Series G | 20,000 | 100,000 | 5.35 |
| Series I | 1,500 | 100,000 | 6.70 |
| Series J | 850 | 100,000 | 6.70 |
Ownership Trends
The ownership of State Street Corporation has shown significant trends over the past few years. As of the end of 2023, institutional ownership had increased by approximately 5% compared to the previous year, reflecting growing confidence among large investors. The trend in individual ownership has remained stable, comprising a steady segment of the overall shareholder base.
State Street Corporation (STT) Mission Statement
Mission Statement Overview
State Street Corporation aims to provide investment servicing, investment management, and investment research and trading services to institutional investors worldwide. Their mission emphasizes a commitment to innovation and customer service, focusing on delivering superior results for clients while fostering a culture of integrity, teamwork, and respect.
Core Values
- Client-Centric Approach: Prioritizing client needs and working collaboratively to achieve their investment goals.
- Integrity: Upholding the highest standards of ethics and professionalism in all interactions.
- Innovation: Continuously seeking new ways to enhance services and improve operational efficiency.
- Diversity and Inclusion: Fostering an inclusive environment that values diverse perspectives and backgrounds.
Financial Performance Metrics
As of September 30, 2024, State Street Corporation reported the following key financial metrics:
| Financial Metric | Value (in millions) |
|---|---|
| Total Assets | $338,481 |
| Total Liabilities | $312,653 |
| Total Shareholders’ Equity | $25,828 |
| Net Income (Q3 2024) | $730 |
| Cash Dividends Declared per Common Share | $0.76 |
| Average Common Shares Outstanding (Diluted) | 301,847 |
Recent Strategic Initiatives
In early 2024, State Street announced a new common share repurchase program authorizing the purchase of up to $5.0 billion of its common stock. As of September 30, 2024, the corporation had repurchased a total of $750 million under this initiative, reflecting management's confidence in the company's long-term growth prospects.
Assets Under Custody and Management (AUC/A and AUM)
As of September 30, 2024, State Street reported:
| Metric | Value |
|---|---|
| Assets Under Custody and Administration (AUC/A) | $46.76 trillion |
| Assets Under Management (AUM) | $4.7 trillion |
Recent Market Performance
State Street's stock performance has shown resilience, with a total return of approximately 12% year-to-date as of September 30, 2024. The company has effectively navigated market challenges, maintaining client trust and satisfaction.
Conclusion
The mission statement of State Street Corporation reflects its dedication to serving institutional investors through innovative solutions and a strong commitment to ethical practices. As the firm continues to evolve, it remains focused on enhancing client relationships and achieving sustainable growth.
How State Street Corporation (STT) Works
Overview of Operations
State Street Corporation operates primarily in two segments: Investment Servicing and Investment Management. As of September 30, 2024, State Street reported total assets of $338.48 billion, a significant increase from $297.26 billion as of December 31, 2023. The firm focuses on providing services to institutional investors, including asset management, servicing, and investment research.
Financial Performance
For the third quarter of 2024, State Street reported net income of $730 million, compared to $422 million in the same period of 2023. The increase in net income was attributed to higher fee revenues and net interest income (NII), which rose by 16% year-over-year to $723 million.
| Financial Metrics | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Income (in millions) | $730 | $422 |
| Revenue (in millions) | $3,259 | $2,691 |
| Net Interest Income (in millions) | $723 | $624 |
| Basic Earnings per Share | $2.29 | $1.27 |
| Diluted Earnings per Share | $2.26 | $1.25 |
Revenue Streams
State Street's revenue is generated from several key areas:
- Servicing Fees: $1.27 billion in Q3 2024, reflecting a 3% increase from the previous year.
- Management Fees: $527 million, an increase of 10% year-over-year.
- Foreign Exchange Trading Services: Revenue increased by 19% to $374 million, driven by higher client volumes.
- Other Fee Revenue: Increased by $81 million, largely due to a $66 million gain on the sale of an equity investment.
Assets Under Management (AUM) and Assets Under Custody/Administration (AUC/A)
As of September 30, 2024, State Street reported:
- AUM of $4.7 trillion, a 29% increase from $3.65 trillion year-over-year.
- AUC/A of $46.76 trillion, up 17% from $39.93 trillion in September 2023.
Capital Management
In the third quarter of 2024, State Street returned $674 million to shareholders through dividends and share repurchases. The company declared a dividend of $0.76 per share, totaling $224 million, compared to $0.69 per share in Q3 2023.
| Shareholder Return Metrics | Q3 2024 | Q3 2023 |
|---|---|---|
| Total Shareholder Return (in millions) | $674 | N/A |
| Dividends Declared per Share | $0.76 | $0.69 |
| Common Stock Repurchased (in millions) | $450 | $N/A |
Expense Management
State Street's total expenses for Q3 2024 were $2.308 billion, an increase from $2.180 billion in Q3 2023. The rise in expenses was driven by higher compensation and employee benefits, which totaled $1.134 billion in Q3 2024, reflecting increased performance-related costs.
Geographic Revenue Distribution
In Q3 2024, State Street's revenue distribution was as follows:
- U.S. Revenue: $1.920 billion
- Non-U.S. Revenue: $1.339 billion
| Geographic Revenue Overview | Q3 2024 (in millions) | Q3 2023 (in millions) |
|---|---|---|
| U.S. Revenue | $1,920 | $1,610 |
| Non-U.S. Revenue | $1,339 | $1,081 |
| Total Revenue | $3,259 | $2,691 |
Investment Portfolio
As of September 30, 2024, State Street's investment securities included:
- Available-for-sale securities: $56.85 billion
- Held-to-maturity securities: $49.48 billion
Market Position and Strategy
State Street continues to strengthen its market position through strategic investments in technology and client service improvements. The firm aims to maintain its leadership in asset servicing and management while adapting to evolving market conditions.
How State Street Corporation (STT) Makes Money
Revenue Streams
State Street Corporation generates revenue through several key streams, primarily from Investment Servicing and Investment Management services.
| Revenue Source | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | % Change |
|---|---|---|---|
| Servicing Fees | $1,266 | $1,234 | 3% |
| Management Fees | $527 | $479 | 10% |
| Foreign Exchange Trading Services | $374 | $313 | 19% |
| Securities Finance | $116 | $103 | 13% |
| Software and Processing Fees | $208 | $188 | 11% |
| Other Fee Revenue | $125 | $44 | nm |
| Total Fee Revenue | $2,616 | $2,361 | 11% |
| Net Interest Income | $723 | $624 | 16% |
| Total Revenue | $3,259 | $2,691 | 21% |
Investment Servicing
In the Investment Servicing segment, State Street provides asset servicing, custody, and administration services to institutional investors. The total assets under custody and administration (AUC/A) reached approximately $46.76 trillion as of September 30, 2024, a 17% increase year-over-year. Newly announced asset servicing mandates totaled approximately $466 billion in Q3 2024, with servicing assets yet to be installed totaling $2.35 trillion.
Investment Management
The Investment Management segment includes management and advisory services. As of September 30, 2024, total assets under management (AUM) were $4.7 trillion, a 29% increase compared to the previous year. Management fees increased by 10% in Q3 2024, driven by higher average market levels.
| AUM Breakdown | Q3 2024 (in trillions) | Q3 2023 (in trillions) | % Change |
|---|---|---|---|
| Total AUM | $4.7 | $3.6 | 29% |
Net Interest Income
Net interest income (NII) for Q3 2024 was $723 million, up 16% from $624 million in Q3 2023. This increase was primarily due to higher investment securities yields and loan growth, partially offset by a shift in the deposit mix towards interest-bearing deposits.
Expenses
Total expenses for Q3 2024 increased by 6% to $2,308 million, compared to $2,180 million in Q3 2023. Key expense categories include:
| Expense Type | Q3 2024 Expense (in millions) | Q3 2023 Expense (in millions) |
|---|---|---|
| Compensation and Employee Benefits | $1,134 | $1,082 |
| Information Systems and Communications | $463 | $411 |
| Transaction Processing Services | $255 | $241 |
| Occupancy | $105 | $101 |
| Amortization of Other Intangible Assets | $56 | $60 |
| Other Expenses | $295 | $285 |
Shareholder Returns
In the third quarter of 2024, State Street returned a total of $674 million to shareholders through dividends and share repurchases. The cash dividend declared per common share was $0.76, totaling $224 million.
| Shareholder Returns | Q3 2024 (in millions) | Q3 2023 (in millions) |
|---|---|---|
| Dividends Declared | $224 | $213 |
| Share Repurchases | $450 | $0 |
Conclusion
State Street Corporation's diversified revenue model, comprising fees from asset servicing and management, along with net interest income, positions it strongly within the financial services sector. The company continues to experience growth in both AUC/A and AUM, enhancing its profitability and shareholder value.
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Article updated on 8 Nov 2024
Resources:
- State Street Corporation (STT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of State Street Corporation (STT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View State Street Corporation (STT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.